Pet Care Industry Faces Revenue Challenges and Margin Pressure in 2025; PET|VET M&A Reports Record Year Despite Market Headwinds

Industry Analysis Reveals Shifting Consumer Behaviors and Evolving M&A Landscape

DENVER, Jan. 7, 2026 /PRNewswire/ -- The pet care industry experienced significant challenges throughout 2025, with revenues remaining largely flat or declining across most geographic markets, according to a new market analysis released today. Despite these broader market headwinds, PET|VET M&A achieved exceptional results, closing 33% more transactions than in 2024 and representing over $54 million in total sales volume. These results are a direct testament to both the strength of its seller clients and the effectiveness of its specialized approach.

Market Performance and Consumer Trends

Year-over-year growth remained elusive as the sector grappled with fundamental shifts in consumer behavior and competitive dynamics. Overall pet ownership has declined by a few percentage points since 2019, contributing to slower growth across the industry.

A significant demographic shift is reshaping the market, with Gen Z now constituting approximately 58% of all pet owners, surpassing millennials in multiple-pet ownership as this generation matures and becomes homeowners. However, "pet inflation" has reached all-time highs, with veterinary care, food, supplies, and services running 24% above 2021 levels, significantly affecting the affordability of pet ownership.

This economic pressure is driving consumers toward private label products over name brands, though affluent consumers remain loyal to their preferred brands. Despite these challenges, continued pet humanization continues to drive demand for premium care and customized services.

Margin Compression and Operational Challenges

The more pressing concern for many operators has been profit margin compression. Labor costs continue their upward trajectory, yet many pet resort operators have hesitated, or been unable, to implement corresponding price increases, resulting in squeezed profitability across the sector.

Pet owners are increasingly diversifying their spending across multiple service providers rather than maintaining loyalty to a single facility. Additionally, app-based pet care platforms continue to erode traditional brick-and-mortar market share, while Gen Z pet parents are integrating their dogs more fully into daily life—including travel and vacation plans—reducing demand for boarding and daycare services.

The M&A Landscape: Quality Over Quantity

The M&A market has undergone a notable transformation, with consolidators adopting a decidedly more selective approach shifting the purchasing mandate to "quality over quantity". Current market dynamics don't support exit valuations that meet return expectations forcing PE firms to consider holding on to assets longer than what is customary.

Pet care businesses generating the strongest buyer interest share common characteristics: growing revenue trajectories, streamlined operational models, disciplined labor management, and healthy EBITDA margins. Staff stability and facility quality have emerged as critical evaluation criteria following the consumer's demand for modern facilities for their pets.

PET|VET M&A: Delivering Results in a Challenging Market

As the only M&A firm exclusively focused on representing individually owned pet care businesses to consolidators, PET|VET M&A has developed deep expertise in matching quality sellers with strategic buyers. The firm concentrates on representing owners of pet resorts and dog daycares that meet the revenue and EBITDA thresholds consolidators require, creating competitive processes that generate multiple bids.

This approach empowers sellers to select not just the highest offer, but the successor company best aligned with their vision for the business' future and their team's welfare.

2026 Forecast and Strategic Recommendations

"We anticipate 2025's challenges will persist into 2026," said Teija Heikkila of PET|VET M&A. "Operators should prepare to work harder simply to maintain current revenue levels. The focus should be on revenue optimization, labor efficiencies, and ultimately, EBITDA enhancement."

High-income households continue to spend on pet care services while other segments have pulled back to more affordable options. With consumer sentiment showing instability and potential cooling in the employment market, pet resorts will need to hustle to retain current revenue levels.

For operators considering an exit, market conditions in 2026 will favor facilities that meet PE criteria: growing and diversified revenue streams, locations in high-density markets, and strong EBITDA margins. Owner-operators of lifestyle properties in rural markets may see improved selling conditions as lower interest rates activate market activity that has been stagnant.

About PET|VET M&A

PET|VET M&A is the only M&A firm exclusively focused on representing individually owned pet care businesses to consolidators. The firm specializes in matching quality sellers with strategic buyers in the pet resort and dog daycare sectors.

For more information or to start exit planning with a free market analysis, contact:

Teija Heikkila
PET|VET M&A
teija@petvetsales.com

Media Contact:
Teija Heikkila 
970.549.6138
teija@petvetsales.com

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SOURCE PET|VET M&A, Sales & Advisory